Crypto market wipes out $140 billion in 5 hours
The global cryptocurrency market saw a rapid decline on Wednesday, losing $140 billion in just five hours as major cryptocurrencies like Bitcoin and Ethereum posted losses. Increased volatility is driven by concerns over U.S. monetary policy, uncertainty about inflation, and a recent government shutdown. Bitcoin dropped 17% from October highs, struggling near the $100,000 mark. Analysts warn of further potential declines, though institutional interest remains strong, with Bitcoin ETFs managing $137 billion in assets.
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Crypto Market Suffers Significant Downturn
The global cryptocurrency market experienced a sharp downturn on Wednesday, erasing $140 billion in value within just five hours. Between 2:00 PM and 7:00 PM UTC, total market capitalization fell from $3.54 trillion to $3.40 trillion, signaling renewed volatility across digital assets.
Price Performance of Key Cryptocurrencies
Leading cryptocurrencies posted notable losses during the sell-off:
- Bitcoin (BTC) slipped 1.83% to around $101,265.
- Ethereum (ETH) fell 1.64% to $3,397.55.
- Among altcoins:
- XRP led the declines with a 3.98% drop to $2.33.
- Solana (SOL) sank 3.69% to $152.24.
- BNB also slid 1.57% to $947.96.
Growing Uncertainty in U.S. Monetary Policy
The crypto markets are under pressure from growing uncertainty over U.S. monetary policy. Federal Reserve policymakers remain divided on whether persistent inflation or a softening labor market poses the greater risk, leaving a December rate cut uncertain. The recent government shutdown has delayed key economic data, adding to this uncertainty.
Impact on Investor Sentiment
As a result, investors are rotating into safer assets like gold. Bitcoin (BTC) has retraced about 17% from its October highs, struggling near the critical $100,000 mark, amid doubts over its role as an inflation hedge.
Wall Street Analysts Warn of Further Downturn
The downturn coincides with warnings from some on Wall Street about potential further declines in Bitcoin’s price. Morgan Stanley strategist Denny Galindo noted that Bitcoin has entered its “fall season”, a signal for investors to secure profits after multi-year rallies. The bank’s analysis compares crypto cycles to seasonal patterns, with a three-up, one-down rhythm suggesting potential downside ahead.
Institutional Adoption Remains Strong
Despite the downturn, institutional adoption of cryptocurrencies remains strong. U.S. spot Bitcoin ETFs now manage over $137 billion, reflecting continued interest in Bitcoin as a potential inflation hedge. Attention now turns to Bitcoin’s ability to sustain its price above $100,000, as a drop below this level could trigger broader market losses.